Mad River Boat Trips, Inc., v. Jackson Hole Whitewater, Inc., 89-268

• Decision Date: 21 December 1990
• Docket Number: No. 89-268,89-268
• Citation: 803 P.2d 366
• Parties: MAD RIVER BOAT TRIPS, INC., Appellant (Defendant), v. JACKSON HOLE WHITEWATER, INC., Appellee (Plaintiff).
• Court: Wyoming Supreme Court

Page 366

803 P.2d 366

MAD RIVER BOAT TRIPS, INC., Appellant (Defendant), v. JACKSON HOLE WHITEWATER, INC., Appellee (Plaintiff).

No. 89-268.

Supreme Court of Wyoming.

Dec. 21, 1990.

Lawrence B. Hartnett, Jackson, for appellant.

William R. Fix, Jackson, for appellee.

Before URBIGKIT, C.J., and THOMAS, CARDINE, MACY and GOLDEN, JJ.

MACY, Justice.

Appellant Mad River Boat Trips, Inc. appeals from the district court's decision declaring that Appellant had a contractual obligation to sell to Appellee Jackson Hole Whitewater, Inc. two special use permits issued by the United States Department of Agriculture--Forest Service. The court ordered Appellant to deliver the use permits to Appellee and to pay Appellee damages for breach of the contract.

We reverse and remand.

Appellant presents the following issues:

1. The trial court erred as a matter of law in its construction and interpretation of the May 26, 1989 contract between the parties in the following respects:

a. The trial court erred by failing to construe the intention of the parties with respect to the purpose of the specific provisions of the Contract at issue in the action below.

b. The trial court erred as a matter of law in finding that the consent of the U.S. Forest Service to the Assignment in Trust required by Article 6.01(a) of the Contract was not a condition precedent to the obligation of the Appellant to perform under the terms of the Contract and by severing Article 6.01 from the contract in accordance with the provisions of Article 8.09.

c. The trial court erred as a matter of law in failing to give meaning and legal effect to the specific language contained in Article 4.03 of the contract which provided the Appellant the right to terminate the contract, and entering judgment finding the Appellant had validly terminated the Contract.

At the time this dispute arose, Appellant conducted whitewater raft trips on the Snake River. It maintained a right to use its rafts on the river in the Bridger-Teton National Forest via Forest Service special use permits. The number of such permits issued was limited by a moratorium, and their issuance was subject to the discretion of the Forest Service. On May 26, 1989, the parties entered into a sales contract stating that Appellant would sell two rafts and two special use permits to Appellee in return for Appellee's payment of $5,000 on the date the agreement was executed, $10,000 on the date of closing, and $60,000 plus interest to be paid in four equal installments. Due to the financing arrangement, Appellant wanted the Forest Service to consent to an assignment of trust, which would require the Forest Service to transfer the special use permits back to Appellant if Appellee defaulted in its obligation to pay its indebtedness. The contract referred to an assignment in trust in the following provision:

As security for the purchase price and all other sums due from Buyer to Seller by this Agreement, Buyer agrees to execute an Assignment in Trust to Seller in the form attached hereto as Exhibit B and incorporated herein by reference, and the parties shall obtain consent of the U.S. Forest Service to said Assignment in Trust, as provided on said Exhibit B, said Assignment in Trust to be delivered to and held by the [Forest Service] until this Agreement is fully performed by Buyer.

(Emphasis added.) That provision was not contained in the section of the contract labeled "Condition Precedent." The Forest Service refused to consent to an assignment in trust because it would undermine the Forest Service's discretion to issue the permits. As a result, Appellant informed Appellee that it could not close on the sale without the Forest Service's consent to an assignment in trust and that it would return the $15,000 when Appellee returned the two rafts.

In response, Appellee filed a complaint seeking specific performance of the contract; a temporary restraining order and preliminary injunction, both of which would compel Appellant to tender the permits to Appellee; and damages for breach of contract. The district court issued an order continuing the proceedings with regard to the application for a temporary restraining order and set a hearing date for the preliminary injunction application. After the parties presented evidence and arguments at the hearing, the district court denied Appellee's request for a preliminary injunction. The court also ruled that the contract was unambiguous and that the dispute could be resolved without the analysis of additional extrinsic evidence.

The parties submitted memoranda addressing the merits of the dispute, and the district court ruled in favor of Appellee. The court ordered Appellant to specifically perform its obligations under the contract and set a date for a hearing on the issue of damages. In its written judgment, the court reiterated that the contract was unambiguous and held that, contrary to Appellant's contention, the Forest Service's consent to an assignment in trust was not a condition precedent to Appellant's obligation to deliver the special use permits to Appellee. The court also concluded that, because the Forest Service would not consent to an assignment in trust, the provision of the contract which required the execution of an assignment in trust was invalid and unenforceable and that, therefore, it was severable under the contract's severability provision.

The district court held a hearing on the issue of damages and ordered Appellant to pay to Appellee $8,402.07 for the net loss of profits from float trip operations, $1,573.33 for the net loss of retail sales, $13,515.60 for attorney's fees, $386.31 for the cost of bringing the suit, and post-judgment interest. This appeal followed.

To resolve the issues raised, we must apply our well established rules of contract interpretation:

The determination of the parties' intent is our prime focus in construing or interpreting a contract. "If an agreement is in writing and the language is clear and unambiguous, the intention is to be secured from the words of the agreement." Nelson v. Nelson, 740 P.2d 939, 940 (Wyo.1987). When the language is clear and unambiguous, the writing as a whole...